National and Guarantee Pensions
- Pension amount
- Conditions for national pension
- Old-age pension under the national pension scheme
- Disability pension
- Disability pension for a longer period of time
- Surviving spouse’s pension
- Orphan’s pension
- Guarantee pension
The national pension and the guarantee pension secure the pensioner’s income if the earnings-related pension is small or no earnings-related pension has accrued. The national pension benefits are the following:
- old-age pension
- disability pension
- survivors’ pension for the surviving spouse and the children
- rehabilitation benefits.
In addition, the pensioner will receive a guarantee pension if his total pension remains below the full guarantee pension. A pensioner may also receive a housing allowance, a pensioner’s care allowance and a child increase.
War veterans with a service badge may receive a regular and an additional front-veterans’ supplement.
The Social Insurance Institution (Kela) pays the national pension and the guarantee pension.
Approximately 50 per cent of all pensioners receive a national pension. The level of the full national and guarantee pension is nearly 25 per cent of the average earnings of Finnish wage earners. The number of pensioners receiving a national pension has come down due to legislative changes and an increase in the level of the earnings-related pension.
The national pension and the earnings-related pension are integrated into one total pension. Each earnings-related pension euro reduces the full national pension by 50 cents, until the earnings-related pension reaches such a level that it no longer entitles to a national pension.
Table Full national pension (EUR/month) in 2018.
|Full national pension||Earnings-related pensions which no longer entitle to a national pension|
|Married or cohabiting||
Source: The Social Insurance Institution
When calculating the national pension, the following pension income is also taken into account:
- a voluntary pension arrangement paid by the employer
- a reduction for early retirement of the old-age pension of the earnings-related pension scheme (when calculating a survivors’ pension, the reduction for early retirement of the deceased person is not added as income)
- the MYEL share included in the farmers’ early retirement aid
- compensation based on the Workers’ Compensation Insurance Act, the Motor Liability Insurance Act and the Military Injuries Insurance Act, but not any related lump-sum increases.
However, when calculating the national pension, the following do not constitute pension income:
- since the beginning of 2005, the part of the earnings-related pension that has accrued from employment after the age of 63
- the earnings-related pension’s child increase
- the earnings-related pension’s rehabilitation increment
- the earnings-related pension’s increment for deferred retirement (nor when included in the survivors’ pensions)
- the pension accrued during studies and periods of caring for a child under the age of 3 (the Act on Compensation from State Funds for Pension Accrual for Periods of Childcare and Periods of Study, VEKL) nor when included in the survivors’ pension)
- the lump-sum increment to the disability pension paid after five years on a disability pension (nor when included in the survivors’ pension).
In the surviving spouse’s pension in the national pension scheme, the above-mentioned parts of the surviving spouse’s own pension are not considered income of the surviving spouse. However, the aforementioned pension parts included in the survivors’ pension received by the surviving spouse are considered income, with the exception of the accrual under VEKL and the deceased person’s lump-sum increment.
Under certain conditions, pensions and other benefits received from abroad reduce the amount of the national pension. An earnings-related pension paid from an EU Member State reduced the amount of the national pension in the same way as the Finnish earnings-related pension does when EU Regulation on social security (883/2004) is applied.
The national pension may be granted to a person resident in Finland, if he or she has lived in Finland for at least three years after reaching the age of 16. If necessary, insurance periods accrued in other countries are also taken into consideration when the EU regulation on social security (883/2004) is applied.
If the residence requirements are met but the applicant or the deceased has resided in Finland for less than 80 per cent between the age of 16 and the start of the pension, the national pension and the survivors’ pension are proportioned to the time of residence in Finland. Under certain conditions, pensions and compensations from abroad reduce the national pension.
Although the lowest age limit for the earnings-related pension was changed to 63 years in 2005, the limit for the old-age pension in the national pension scheme is still 65 years.
However, persons born before 1952 may draw an early old-age pension in the national pension scheme at the age of 62. Persons born in or after 1952 are entitled to the early old-age pension in the national pension scheme at age 63. The reduction for early retirement is 0.4 per cent for each month that the pension is taken early before the age of 65. A person retiring on an earnings-related pension at the age of 63 can thus receive a national pension at that age only in the form of an early pension.
If the old-age pension is postponed to begin later than the beginning of the month following the person’s 65th birthday, the national pension will be increased by 0.6 per cent for each month. The increase is calculated for each month that the pension is postponed, and it has no upper limit. However, the national pension is not increased for the months for which the applicant is not entitled to a national pension after reaching the age of 65 (e.g. due to residence abroad).
The rates for the reduction for early retirement and the increment of deferred retirement differ from each other in the earnings-related and the national pension scheme.
Persons aged 16-64 years may apply for a disability pension, which is awarded either until further notice or as a cash rehabilitation benefit for a specified period of time. Usually, the national pension is granted at the same time as the earnings-related pension, but there are differences in age limits. An earnings-related pension may not be received prior to the age of 18, and the earnings-related pension is granted as an old-age pension after the person has turned 63.
Income during short-term illnesses and rehabilitation is secured through the sickness and the rehabilitation allowances paid until the age of 68.
Unlike in the earnings-related pension scheme, it has not been possible to receive a partial disability pension in the national pension schemes.
As in the earnings-related pension scheme, the unemployment pensions were granted in the national pension scheme only to persons born before 1950. However, the Social Insurance Institution granted an unemployment pension for persons aged 60-64, while the upper age limit for an unemployment pension in the earnings-related pension scheme was 62 years.
Thus, persons born in 1950 form the first age group that is left outside the scope of the unemployment pension. In case of unemployment, their income is secured through the income security for the unemployed. However, persons born in 1950 or later who receive a continued unemployment allowance under the act on income security for the unemployed are entitled to the national pension and the earnings-related pension without any reduction for early retirement from the age of 62. For long-term unemployed persons born in 1958 or later, the lower age limit for old-age pension without a reduction for early retirement will rise to 63 years.
Survivors’ pension for the surviving spouse and the children
The survivors’ pension is paid only to a surviving spouse aged less than 65, but in other respects, it is granted under the same conditions as in the earnings-related pension scheme.
The surviving spouse’s pension consists of a starting and a continuing pension. The surviving spouse is entitled to a starting pension for six months after the death of the spouse. The starting pension consists of a fixed-amount share, regardless of the surviving spouse’s earnings or wealth.
If the surviving spouse does not care for his or her own or the deceased spouse’s child under the age of 18, and depending on the surviving spouse’s earnings, the continued pension paid consists only of the additional amount. Half of the full additional amount is paid if the surviving spouse’s earnings exceed EUR 55.54. The surviving spouse’s pension is not paid if the earnings exceed EUR 1,1096.71/month in 2018 (EUR 954.55/month if the surviving spouse is married).
If the surviving spouse cares for a child under the age of 18, the continuing pension is at least the basic amount (EUR 101.59), and, depending on the surviving spouse’s earnings, an additional amount may be paid. The surviving spouse’s pension is not paid if the earnings exceed EUR 1,110.05/month in 2018 (EUR 967.88/month if the surviving spouse is married).
The orphan’s pension is paid to the deceased person’s own or adopted child, or a child who was cared for by the deceased, as long as the child is under 18 years of age. If the child is a full-time student between the ages of 18 and 20, the child can apply for a so-called student’s pension from the Social Insurance Institution. The student’s pension includes only the basic amount of the orphan’s pension. If both parents or guardians of the child are dead, an orphan’s pension is paid after them both separately.
The orphan’s pension consists of the basic amount (EUR 59.68/month), regardless of the child’s earnings, and the additional amount (EUR 90.26/month) if the total survivors’ or assistance pension paid by others than the Social Insurance Institution is less than EUR 236.05/month.
The guarantee pension came into force on 1 March 2011. It improves the economic welfare of low-income pensioners. If the pension recipient’s total national and earnings-related pensions amount to less than the lower pension income level stipulated by law, the difference is paid in the form of a guarantee pension. In 2018, the pension income limit for the guarantee pension is EUR 775.27.
Slightly over 100,000 pensioners, i.e. approximately 8 per cent of all pension recipients, are eligible for the guarantee pension.
The following are eligible for the guarantee pension:
- a person who has turned 62 and receives an old-age pension or an early old-age pension
- a person who has turned 16 and who receives a disability pension
- a person on an unemployment pension
- a person who receives a pension from the system based on the act on Farmers’ Early Retirement Aid
- a disabled immigrant aged 16
- an immigrant who has turned 65.
If the old-age pension has been granted as an early old-age pension, the guarantee pension is reduced by the same amount as the reduction for early retirement made to the old-age pension.
Other pension income reduces the guarantee pension to its full amount. Pension income as a reducing factor is taken into consideration more extensively in the guarantee pension compared to in the national pension.
A person’s family status does not affect the amount of the guarantee pension: A full guarantee pension is always the same regardless of whether the person in question is married, single or living in a domestic partnership. Only pension income affects the amount of the guarantee pension.
For more information on the guarantee pension, please visit the website of the Social Insurance Institution.